How is premium priced

Underwriting is the process by which the insurer uses to evaluate the risk and exposure of potential clients and assess their eligibility to receive coverage. In this process, they will determine how much coverage to provide, what is excluded if any, and thus the premium to be paid by the client. Each insurer has its own set of underwriting guidelines to protect the financial status of the company. There are 3 types of underwriting: Full Medical Underwriting, Continuing Personal Medical Exclusion (CPME) and Moratorium Underwriting.

Full Medical Underwriting (FMU)

Under FMU, applicants are required to submit a full declaration of their medical records to the insurer who will then verify with the applicant’s GP. Insurer will then make a decision to cover or exclude any pre-existing condition or name other conditions to exclude due to the potential of arising because of current condition. If applicant fails to disclose details of any past or present illness, should the illness arise in the future, insurer has the right to deny any claims.

Thus it is extremely important to be very thorough in your medical declaration. Some insurers may agree to cover pre-existing conditions at a loading, meaning, higher premium. This is dependent on various factors such as your state of health at application, the condition of your illness, when your illness appear, how long you have had it, etc.

With FMU, applicant will have to wait a period of time to know whether they will be covered or not.

Continuing Personal Medical Exclusions (CPME)

If you want to switch insurer, maybe due to bad customer service, but you are suffering from a pre-existing condition that your current insurer is covering, your next chosen insurer will most probably use CPME to underwrite your policy. With CPME, applicant’s benefits and exclusions, if any, in the new policy will be similar to their old policy. In this instance, applicant will go through full medical underwriting. This process ensures continuous medical coverage.

Moratorium Underwriting also known as Point-of-Claim Underwriting

Provided that you are healthy and with no past illnesses, the most common and cost-effective way to get international health and medical insurance coverage is by moratorium underwriting. With moratorium, applicant need not make any declaration of his/her medical history. Illness is assessed at the point of making a claim. Usually, pre-existing conditions that occurred 5 years before your policy starts will be excluded. If no claim has been made on the pre-existing condition or related condition for a continuous period of 2 years, it will then be included in the cover. If a claim has been made during this two-year period, the two-year qualifying period starts all over again.

With moratorium underwriting, coverage starts straight away.

FMU verses Moratorium Underwriting

Advantages

Full Medical Underwriting (FMU)

Moratorium Underwriting

It is stated clearly what will or will not be covered

Coverage starts immediately

Premium may be lower for healthy individual

No loading on premium due to medical history

Claims may be processed faster

Pre-existing conditions that would be permanently excluded under FMU might be covered under Moratorium Underwriting if no claim is made for that particular condition during the two-year qualifying period

Disadvantages

Full Medical Underwriting (FMU)

Moratorium Underwriting

Have to wait a period of time to know whether one will be covered or not

It is not stated clearly what may or may not be covered

A loading may be added to the premium if a pre-existing condition is accepted

Consumers may forgo required treatment for the particular condition during the two-year qualifying period in order for it to be eligible for cover. In doing so, they may be incurring medical cost and putting themselves at risk.